College Funding | Recessions & Bear Markets

College Funding Conversations

College Is expensive. And every family gets to choose their own rules for their game of life.

Here are some real-life examples of the “rules” from some of the families we serve:

If you can get in, we’ll pay 100%.
You get $X for 8 semesters. Use it wisely.
We’ll pay for As & Bs. You pay for Cs and below.
Once your 529 is drained, you start paying.
We’ll pay for 50%. You can get loans and a job to pay for the rest.
We’ll pay for college, but you can’t be an Art History major.
We’ll pay for undergrad. Grad school or business school is on you.

How much you contribute to college is not just a reflection of how much you have; it’s a reflection of what you value.

Some parents want their kids to have skin in the game. Some want to remove financial stress so they can focus on school. Some set limits. Some say, “Figure it out.”

But too many families don’t have a plan. They assume they’ll “figure it out when the time comes.” Then the acceptance letters arrive, emotions take over, and financial decisions get made on the fly—sometimes at the cost of long-term financial security.

There’s no right or wrong answer. But there is a right time to talk about it: before applications go out. Before a dream school acceptance clouds judgment. Before your child assumes they know the answer—only to be blindsided later.

So start the conversation today. First with your spouse and your advisor. And then with your kids. What’s your family’s rule?

Ron Lieber’s book is the best resource on this topic: The Price You Pay for College.

Recessions and Bear Markets

The graphic below shows every recession (orange bars) and equity bear market (blue bars) in the post-WWII era. The individual boxes represent monthly increments, and the date range to the left represents the entire cycle—from either the beginning of the bear market or the beginning of the recession to the completion of the cycle(s).

As shown, recessions and bear markets don’t always overlap. There were four recessions—1945, 1953-54, 1960-61, and 1980-81—that did not have an overlapping bear market (although there was one in short order in 1981). Four bear markets did not overlap with recessions: 1946-47, late-1961-62, 1966, and 1987.

The visual above also highlights the lagged nature of the declaration of recessions’ start (red boxes) and end (green boxes) dates. Since 1978, the official arbiter of recessions has been the National Bureau of Economic Research (NBER), which provides start/end dates by month, always in retrospect. In contrast to conventional wisdom, the NBER’s definition is not two consecutive quarters of negative gross domestic product (GDP) readings.

The actual definition per the NBER is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” The view of NBER’s Business Cycle Dating Committee (BCDC) is that “while each of the three criteria—depth, diffusion, and duration—needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another.”

Source: Charles Schwab

Mastering the Blade—Our compliance department strictly prohibits any of you from trying this at home: Click here for a rather amazing skill that must have involved loads of stitches to reach the Wizard level.

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